Design and Building Practitioners Act 2020 (NSW): a broad reading of those who owe a duty of care?

Design and Building Practitioners Act 2020 (NSW): a broad reading of those who owe a duty of care?

The Design and Building Practitioners Act 2020 (NSW) (“the DBP Act”) is a potent piece of legislation, which seeks to address the poor perception held by the public in relation to the building industry.

One key feature of the DBP Act is the introduction of a statutory 10 year duty of care imposed on “a person who carries out construction work … to exercise reasonable care to avoid economic loss caused by defects”: see s37.

This duty is owed to owners and future owners, as well as owners corporations and associations.

The current reading of the NSW Supreme Court is that the word “person” should be given a broad reading, and would capture any person “having substantive control over the carrying out of any work”: see The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2022] NSWSC 659

The recent NSW Supreme Court decision of Boulus Constructions Pty Ltd v Warrumbungle Shire Council [2022] NSWSC 1368 12 October 2022 (“Boulus Constructions”) provides an example of the broad range of people who can be caught up by this duty of care.

• Boulus Constructions: Facts

The Builder (Boulus Constructions Pty Ltd) entered a contract with Warrumbungle Shire Council to build a retirement village known as the Three Rivers Regional Retirement Community.

The Builder commenced proceedings in 2018 against the Council for outstanding payment, and Council commenced a Cross-Claim against the Builder for defects.

While the case dealt with a number of issues, one major issue was that the Council now sought to amend their claim to include a claim under s 37 of the Design and Building Practitioners Act 2020 (NSW) against the builder but also against the following persons:

1. Mr Brian Boulus (Managing Director of the Builder), and
2. Mr Bradley McCarthy (the Project Site Supervisor). 

Against Mr Brian Boulus it is alleged:

“ … [i]n his capacity as the managing director of [the Builder], [Mr Boulus] had the power and ability to and did substantively control all of the building works comprising the entire project, such control including the appointment and control of the project delivery staff working for [the Builder] (including the appointment and control of [Mr McCarthy]), the supervision of the adequacy of the works performed by such project delivery staff, the selection and appointment of subcontractors to perform elements of the Works for which [the Builder] was ultimately responsible, and the overall supervision and acceptance of the works performed by [the Builder’s] employees and subcontractors, for the ultimate benefit of [the Council]. Further, as the managing director of [the Builder], [Mr Boulus] had the ultimate ability to control how the Works performed by [the Builder] were carried out.”

Against Mr Bradley McCarthy, it is alleged:

“As the site supervisor for the Project, [Mr McCarthy] actively supervised, coordinated and project managed all of the primary elements of the building works comprising the project, and coordinated and directed how the Works performed by [the Builder] were carried out, including by directing and engaging with [the Builder’s] subcontractors in the performance of their works.”

The Court made a note of the submission of the Builder’s barrister as “to the potentially wide-ranging consequences of construing “persons” in s 37 to cover a director of a builder, such as Mr Boulus, or an employee of a builder, such as Mr McCarthy.”

The barrister for the builder accepted s37 was broader than capturing just the builder, but submitted it should not extend to persons acting as an agent for another.

HH Justice Stevenson, however, placed great emphasis on Parliament’s inclusion of the word “person”, and held that the proper reading of the legislation was that it would in these circumstances allow for the case to proceed against the Managing Director and Project Manager.

While this case was only a preliminary decision in the matter, and it waits to be seen whether Council will be successful against any or all of the Builder, the Managing Director, and/or the Project Manager at a final hearing, this case has allowed Council to proceed with their claim against all three.

For building law advice, please contact Maclarens Lawyers on 9682 3777.